City Talk: M&S close to cash call

City analysts predict that Marks & Spencer (M&S) is close to making a cash call for expansion, once Marc Bolland, the new chief executive, completes a review of its business.

The new boss needs to revitalise the food business in the face of aggressive competition and economic uncertainty. M&S is believed to have lost upmarket customers to Waitrose.

Bolland may also decide to expand internationally. If he wants to increase the number of outlets at home and abroad, he will have to raise the necessary cash by way of a rights issue possibly of around £400m to £1bn. He may concentrate on increasing the 325 Simply Food outlets by adding up to 50 more stores. This chain is profitable, with operating profit margins in the 8-9% range.

In a surprise announcement, Ian Dyson, M&S' finance and operations director, is leaving to join Punch Taverns as chief executive.



Mitchells & Butlers to focus on food-led pubs



Mitchells & Butlers, the owner of the All Bar One and Harvester chains, which sell food as well as drink, is to sell many of its pubs to generate up to £500m for the group.


A sale of at least 300 'wet pubs' will enable the group to focus on its six food-led branded chains, which include the Toby, Carver and Harvester brands. The company may also move to converting wet pubs to the food-led brands.

The group also plans to develop smaller-scale versions of the food-led brands for the high street, as well as for leisure and out-of-town shopping centres.



Sainsbury's to sponsor 2012 paralympics



In an apparently shrewd move, Sainsbury's has announced that it is to sponsor the 2012 Paralympic Games.


This will provide an excellent opportunity to promote its brands and, with Channel 4 broadcasting the Games instead of the BBC, Sainsbury's will have many more opportunities to get a major payback on its investment.



Northern Foods closes ready meals factory



Northern Foods is closing down its ready meals factory in Swansea after failing to clinch a deal with Sainsbury's on the supply of 'ethnic cuisine' ready meals. A total of 234 jobs are under threat. The closure will produce a £16m impairment charge in Northern Foods' next annual results and a £4m cash charge is expected next year after the redundancies have been made.


Northern Foods boss Stefan Barden is following a policy of getting out of unprofitable contracts and closing loss-making factories. It is understood that Sainsbury's would not agree to a contract that would have made the Swansea factory viable.

Full-year sales are expected to be up by 1%. And Northern says it will meet its full-year profit forecast.

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